This week, two U.S. airlines will be flying passengers on flights powered by biofuels for the first time. On Monday a Continental flight from Houston to Chicago used a biofuel blend made in part from algae, and Wednesday Alaska Airlines is set to fly passengers using a fuel made in part from cooking oil.

If all goes well, more airlines may start to use alternative jet fuels. But the shift is not without its challenges.

Alaska Air Group has focused on fuel efficiency in recent years to keep costs down and help the environment. Alaska Air Director of Government Relations Megan Lawrence lists innovations like fog-busting satellite technology used to land in hard-to-reach locations and make flight paths more efficient.

"So the next kind of big thing on the horizon, because efficiency can only get us so far in terms of reducing our carbon footprint, is the biofuels arena," Lawrence says.

Emission Reductions?

She says the biofuel the airline will be using will provide a 10 percent reduction in carbon emissions compared with conventional jet fuel. The company has bought enough for 75 flights to Washington, D.C., and Portland, Ore., and she promises it won't pass any extra costs on to consumers.

But this next step in Alaska Air's evolution isn't exactly the gold standard of green. This particular batch is sourced from used cooking oil that's not even local: It comes from deep fryers in Texas and is processed in New Orleans.

Dean Williams, a chemist who operates the fuel facility for Sea-Tac Airport in Seattle, says Alaska Air's new biofuel will come via rail car and tanker truck, both of which increase the carbon footprint.

But he says this batch of fuel is not really that different from conventional jet fuel. (And, in case you're wondering, it doesn't smell like french fries.)

"It smells better than a gas station in here. We have good air conditioning in here and good quality control, but that's one of the things about jet fuel is it is safe and clean and very highly regulated, as far as quality," Williams says.

He says you can blend in up to 50 percent biofuel if it passes certain chemical tests.

A New Industry's Growing Pains

Bill Glover, Boeing's strategist for environmental policy, says different airlines have different ways of reducing the air pollution they create. But before they can do that most effectively, the industry has to build a whole new supply chain for biofuels.

"It's going to take a little while to get the infrastructure in place, get the volume and get some of the economics a little more favorable," Glover says. "But our ... near-term target is 1 percent of all the aviation fuel have some bio-content by 2015."

Richard Aboulafia, an aviation analyst with the Teal Group in Fairfax, Va., says real progress is at least 15 years away.

"What you've got is somewhere between advanced showmanship and expensive subsidies," he says.

Aboulafia says Alaska's pilot project might not be getting direct subsidies but the whole industry is getting huge tax breaks. Glover counters that it's crucial for the biofuels industry to get this kind of support, because air travel is only growing — as is the pressure to become energy independent and reduce greenhouse gas emissions.

"We realize we have to take action to make sure that we keep carbon emissions small and find ways to ... drive them towards zero," Glover says.

But one of the things slowing that drive is the price. Alaska Air's biofuel costs nearly six times as much as conventional jet fuel. And the company is only willing to absorb the cost of a small number of demonstration flights, like the ones that take off Wednesday.

Here in the United States, two airlines are pioneering the use of biofuels. On Monday, a Continental flight from Houston to Chicago was powered with a fuel made partly from algae. And today, Alaska Airlines will fly passengers using a biofuel blend made from cooking oil. Bellamy Pailthorp from member station KPLU in Seattle reports on the challenges of shifting the airline industry to alternative fuels.

BELLAMY PAILTHORP, BYLINE: In recent years, the Alaska Air Group has focused on fuel efficiency to keep costs down and help the environment.

(SOUNDBITE OF AIRPORT PA)

PAILTHORP: At SeaTac Airport, the airline's director of government relations, Megan Lawrence, is standing near her employer's ticket counter. She lists off innovations like fog-busting satellite technology used to land in hard-to-reach locations and make flight paths more efficient.

MEGAN LAWRENCE: So the next kind of big thing on the horizon, because efficiency can only get us so far, in terms of reducing our carbon footprint, is the biofuels arena.

PAILTHORP: She says the biofuel they'll be using will provide a 10 percent reduction in carbon emissions, compared to conventional jet fuel. They've bought enough for 75 flights - to Washington D.C. and Portland Oregon - and she promises they won't pass any extra costs on to consumers. But this next step in Alaska Air's evolution isn't exactly the gold standard of green. This particular batch is sourced from used cooking oil that's not even local. It comes from deep fryers in Texas and is processed in New Orleans.

DEAN WILLIAMS: My name is Dean Williams and I operate the fuel facility for SeaTac Airport.

PAILTHORP: Williams is a chemist who presides over what's essentially a huge gas station. He says Alaska Air's new biofuel will come via rail car and tanker truck, both of which increase the carbon footprint. But, he says this batch of fuel is not really that different from conventional jet fuel. And, in case you're wondering, it doesn't smell like French fries.

WILLIAMS: It smells better than a gas station in here. We have good air conditioning in here and good quality control, but that's one of the things about jet fuel, is it is safe and clean and very highly regulated, as far as quality.

PAILTHORP: Williams says you can blend in up to 50 percent biofuel, if it passes certain chemical tests. With him is Bill Glover, Boeing's strategist for environmental policy. He says different airlines have different ways of reducing the air pollution they create. But before they do that most effectively, the industry has to build a whole new supply chain for biofuel.

BILL GLOVER: It's going to take a little while to get the infrastructure in place, get the volume up and get some of the economics more favorable. But our near- term target is 1 percent of all the aviation fuel would have some bio-content by 2015.

RICHARD ABOULAFIA: Why? Why?

PAILTHORP: Richard Aboulafia is an aviation analyst with the Teal Group in Fairfax, Virginia. He thinks real progress is at least 15 years away.

ABOULAFIA: What you've got is somewhere between advanced showmanship and expensive subsidies.

PAILTHORP: Aboulafia says Alaska's demonstration project might not be getting direct subsidies but the whole industry is getting huge tax breaks. Boeing's Billy Glover counters, it's crucial for the biofuels industry to get this kind of support because air travel is only growing, as is the pressure to become energy independent and reduce greenhouse gas emissions.

GLOVER: We realize we have to take action to make sure that we keep carbon emissions small and find ways to actually, you know, drive them towards zero.

PAILTHORP: But right now, one of the things slowing that drive is the price. Alaska Air's biofuel cost nearly six times as much as conventional jet fuel. And the company is only willing to absorb the cost of a small number of demonstration flights, like the ones that take off later today. For NPR News, I'm Bellamy Pailthorp in Seattle. Transcript provided by NPR, Copyright NPR.